This recent bit of news sparked a thought about loyalty and frequent guest programs.

Loyalty should be based on the experience, not bribery. If you’re good, guests will come back and refer you to others. If you’re not, they won’t. It’s as simple as that. So, if you build a loyalty program to “retain” customers, you’re telling us something…you’re really not good enough. Rather, put your money into building fantastic memories. Then, develop an “appreciation” program that sends this message…thank you! That’s it, no strings attached, no mixed messages, etc.

Loyalty or “hostage” programs are extremely expensive, and really don’t work in the end. I recall years ago Marriott debating whether to end their frequent guest program. It was costing them a fortune. But, the thinking was that if they dropped it, they would lose too many customers. Well, that’s the true test of whether you have a hostage program or an appreciation message. Is the experience good enough to stand on its own? Or, does it need to be augmented with incentives to keep people coming through the door?

There’s an exception to this premise…when all of the experience options are relatively the same. A good example is the airline business. With exception of a few, service levels are at an all-time low across the board on the major carriers. So, their frequent flyer programs are more valuable than ever. These programs have become the primary reason customers choose them. Of course, their marketing departments will have you believe this is a good thing, “our customers really like us”. BS...Hostages don't get to exercise options because their aren't any! You’ll note that in markets where there’s competition from customer focused carriers, i.e., SWA and jetBlue, the big guys lose.

Build great memories for your guests and thank them…don’t hold them hostage.